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Alberto Abaterusso
Alberto Abaterusso
Articles (1663) 

Analysts Suggest Buying These 3 Falling Knives

Overstock.com tops the list

May 06, 2019 | About:

The following companies can be considered "falling knives" because their share prices have plunged more than 59% for the year to date through May 3. What's more, Wall Street has issued a buy recommendation rating for all three stocks.

Falling knives usually anticipate financial distress, and the risk of severe losses. If investors add a GuruFocus financial strength rating of at least 5 out of 10 to their screening, however, they can significantly reduce the risk.

Here are the results of a search.

Shares of Overstock.com Inc. (NASDAQ:OSTK) closed at $12.9 on Friday for a market capitalization of roughly $415.15 million. The stock declined 66% over the last 52 weeks through May 3.

The specialty retailer’s closing price on Friday was well below the 200, 100 and 50-day simple moving average lines. The 52-week range is $12.22 to $48.00.

The 14-day relative strength index of 31 suggests the stock is close to oversold levels.

The price-book ratio is 3.16 versus an industry median of 1.63, and the price-sales ratio is 0.24 versus an industry median of 0.68.

GuruFocus assigned a financial strength rating of 6 out of 10 and a profitability and growth rating of 5 out of 10.

Wall Street issued an average target price of $51, reflecting 295.35% upside from Friday's closing price.

CES Energy Solutions Corp. (CESDF) closed at $1.8 per share on Friday for a market capitalization of $467.77 million following a 66% decline for the past year.

Friday's closing price was below the 200, 100 and 50-day simple moving average lines. It was 2.3% off the 52-week low of $1.76 and 187% from the 52-week high of $5.16.

The 14-day relative strength index of 22 suggests the stock has practically reached oversold levels.

The provider of consumable chemical solutions to oil and gas operators has a price-earnings ratio of 13.79 versus the industry median of 18.04 and a price-book ratio of 0.91 versus an industry median of 1.19. The EV-Ebitda is 7.86 compared to the industry median of 11.92.

GuruFocus assigned a financial strength rating of 5 out of 10 and a profitability and growth rating of 7 out of 10.

Wall Street issued an average target price of $4.96, which reflects 175.6% upside from the closing share price on Friday.

Shares of SG Blocks Inc. (NASDAQ:SGBX) closed at $1.2 on Friday for a market capitalization of $5.21 million. The stock has fallen 74% over the past year through May 3.

The chart below shows the stock is trading below the 200, 100 and 50-day simple moving average lines. The 52-week range is $1.01 to $5.9.

The 14-day relative strength index of 37 suggests the stock is near oversold levels.

The company, which is a provider of modules for buildings' construction in the U.S., has an EV-Ebitda ratio of 0.34 versus the industry median of 11.03.

GuruFocus assigned a financial strength rating of 8 out of 10 and a profitability and growth rating of 3 out of 10.

Wall Street issued an average target price of $6, which represents 400% upside from the closing price on Friday.

Disclosure: I have no positions in any securities mentioned.

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About the author:

Alberto Abaterusso
If somebody asks what being a value investor means, Alberto Abaterusso would answer, “The value investor is not just the possessor of the security that represents the company, but he is the owner of that company. As an owner of the company the value investor is actively involved in the dynamics of that company and his first concern is how to have sales progressively growing. Also, the value investor is probably one of the most demanding persons in the world concerning sales.”

Abaterusso is a freelance writer based in The Netherlands. He primarily writes about gold, silver and precious metals mining stocks. His articles have also been widely linked by popular sites, including MarketWatch, Financial Times, 24hGold, Investopedia, Financial.org, CNBS, MSN Money, Zachs, Reuters and others. Alberto holds an MBA from Università degli Studi di Bari (Italy), Aldo Moro.

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